Product Strategy For Early-Stage Gaming Startup

One of the earliest and most important decisions founders face when starting a games company is the level of complexity of their first game: should it be casual or mid-core? As an angel investor, every week I get to take a look at pitches from founders and I see them struggling with the same problems over and over again. So, how does one decide where to start and which approach will bring the most success long-term? Here’s what I’ve learned through my experiences creating a games company and going through countless pitches since.

The economics of mobile game ventures

After hearing the pitch for a game, I start to think about the resources required for building it. To get to the root of this, the first things to consider are differences in the size and preferences of the audiences of both categories.

Mid-core

The mid-core audience is primarily driven by competition, meaning that players are strongly drawn to leaderboards and duals, and more inclined to spend money to gain a higher rank inside the game.

The appeal of the competition motivation drops rapidly with age, so founders should bear in mind their target audience will be gamers in their teenage years and early twenties.

While mid-core audiences have the potential to generate higher profits via in-app purchases, they offer less scale and their primary motivations and expectations of the game create more complexity for developers. The audience consists of people who love gaining power and competing against others, and to cater to these needs, game developers need to integrate features like guild mechanics, PVP, and deep collecting elements into their mid-core games.

This requires both a bigger team size and, as there is more technical complexity involved, a longer soft launch to test out all the engagement and monetization possibilities. Mid-core significantly increases development costs.

Casual

On the other hand, the casual audience spends less but there’s more of them. In terms of user acquisition, this allows for greater scale at more competitive prices. If you look at the cost-per-install numbers that get reported by hyper-casual developers, you usually see numbers like $0.10 or $0.15. These acquisition costs reveal that there is a broad audience trying out and playing hyper-casual games. When you go to mid-core, the CPI numbers start from a few dollars, reaching up to $20 per acquired player.

Casual gamers are mostly driven by completion: leveling up and progressing in the game, completing tasks, and so on. Compared to the mechanics required in mid-core titles in order to cater to gamers’ motivation for competition, completion is easier for developers to integrate, with simple measuring systems such as saga maps, and other leveling representation sufficing. This means a smaller team is required and the production process is shorter: development will typically take a few months before soft-launch.

The right approach

Why does this matter? Why should I care? Because the chances of failure are equally high for both casual and mid-core. But the development costs aren’t the same. You bet bigger with mid-core, whereas casual titles are significantly cheaper to produce. And failure isn’t as costly.

As an angel investor, my perspective is that you’re betting $1 million on a mid-core game, where for the same money you could have five attempts with casual games to find success. And in today’s market, $1 million often isn’t going to be enough.

It’s safe to say that building a new company to go entirely into mid-core is dangerous and lethal. But, developers can still have daydreams of mid-core success. The answer is to take on more complex projects gradually. Let me explain the thinking here.

Start with hyper or hybrid casual. Develop in three months, launch, and scale with profitable UA. You won’t gain top-grossing ranks yet. With every new title launched successfully, you can add a bit more complexity to the next game.

These aren’t significant steps and might cause anxious founders to feel uncomfortable that they aren’t doing the mid-core game yet. But these steps are controlled ones. At some point, the company will have financial stability from the live titles, to start taking on riskier projects — inch by inch, moving towards the mid-core bets.

Playgendary

Playgendary started with rather simple casual titles. Slowly, the company moved to idle games that had more retention elements, an in-game economy, and in-app purchases. This allowed for a controlled risk: monetization remained predominantly through video ads, but the games provided a possibility to explore a more in-depth metagame. Most recently, they have tried a Battle Royale game and a Clash Royale style racing game, which both added lots of layers of complexity. Playgendary could afford these projects since they’d launched a dozen casual titles, which all were bringing in revenues to fund them.

FuturePlay

Another example is Futureplay, a Finnish studio founded in 2015 with a focus on “view to play” games, meaning that the company built games that had video ads as the primary monetization model. This approach deepened their pockets, allowing them to make several idle games, to which they added live events that increased their lifecycle. The idle games generated a sustainable positive cash flow, which gave way to the development and launch of their first mid-core game, Battlelands Royale.

Wildlife

Most recently, the Brazilian Wildlife Studios raised $60 million after demonstrating the long-term merits of this strategy. Wildlife started doing casual titles almost ten years ago, gradually building the company with more casual titles. Only last year did they launch two major mid-core titles, Zooba and Tennis Clash, which both took their spots on the top-grossing charts.

AppAnnie reveals that Wildlife has 68 games live on mobile platforms. These include Bike Ride, which came out in 2012 and is still making $30k a month. If you stack a couple of dozen games like that, you can easily create a mid-core product, spend 18 months on it and then kill it if it doesn’t work in soft launch, without having a disastrous impact on your company.

Wildlife is testament to that, having killed some 109 games. By looking at the early days, there were lots of hyper-casual style games that were cheap to “kill” during a soft launch. Lately, they’ve also launched and killed more complex games like Shooter Arena. They could afford it since their live games were paying for these investments.

Final words

Starting a new company is a complicated procedure. You need to get a lot of people to work together for a common cause. I urge developers to lay a foundation with less risky casual titles. Later, when the risks don’t involve betting the whole company on one game project, should you explore mid-core.